Blog:Two-Bucked off

As I mentioned in my weekly highlights, which went out on Tuesday, just-drinks spent the first two days of this week at the annual Wine Evolution conference in Paris. Again I would like to congratulate the organisers Skalli & Rein on an excellent event. I went through some of the highlights of day one in the weekly, but in truth the event really began to hot up on day two.

One speaker in particular grabbed the attention of the audience. He was Marc Engel a research manager with B/R/S Group, who spoke about the Two-Buck Chuck phenomenum in the US. B/R/S had conducted consumer research into why people are buying a wine brand priced at $1.99 in such droves and what the repercussions are for the rest of the industry – his findings were fascinating and not a little worrying.

The majority view from within the US industry has been that Two-Buck Chuck, and the copycat brands that have sprung up around it, are nothing more than a blip – indeed, in a recent survey, 91% of respondents from within the California wine industry said they would not be re-evaluating their business strategies as a result of the rise in super-value sales.

But B/R/S’s research suggests that to dismiss this as only a short-term shift is at best foolhardy and at worst very damaging. The hope, when the Charles Shaw Varietals (Two-Buck Chuck’s real name) were launched, was that they would attract new drinkers to the category. However, according to B/R/S, 70% of those purchasing the brand also purchased wines at $14 or above. In short, these are not novice drinkers but regular drinkers trading down. Indeed, only 4% had not purchased wine in the six months prior to Two-Buck Chuck’s launch.

The big concern for the wine industry is that this trend is completely contrary to the established wisdom that wine drinkers are drinking less but more expensively. Worse still is that 40% of Two-Buck Chuck drinkers said the wine had replaced other wines they once drank, in particular in the $6 - $10 price bracket.

Perhaps most worrying of all, though, were the video clips Engel ran at the end of his presentation of interviews with Two-Buck Chuck drinkers. One in particular sticks in my mind. It was of a lady – probably in her late twenties – who hoped that by buying Two-Buck Chuck she was delivering a message to the wine industry. “Don’t take us for fools,” she said, “if you can make a good bottle of wine for $2 you can make a great bottle for $5.”

There will be more on Wine Evolution over the next few weeks. See today's news for the controversial presentation at the event by former Southcorp man David Combe on the "abuses of power" by UK retailers.